Chinese aluminum industry's Apr prosperity index slumps to the lowest

The prosperity index of China's aluminum industry declined by 1.2 points to 17.8 points in April, the lowest level since the report was first launched on November 12, 2015, the latest report released by China Nonferrous Metals Industry Association showed.

Although China's primary aluminum demand will continue to pick up in the coming months along with the recovery in economic activity, the index might remain low for some time to come, as the impact of the coronavirus pandemic on downstream aluminum demand outside of China and how long it will last remain uncertain, the report showed.

The fixed asset investment in the aluminum smelting industry fell 47.7% in the first three months of this year due to the coronavirus pandemic and supply side structural reform, the report showed. Meanwhile, daily output of primary aluminum and alumina declined 6.1% and 7.4% month on month to 96,000 mt and 182,000 mt, respectively, on a seasonally adjusted basis in March.

Thanks to the strong demand from construction, transportation and electricity sectors, the consumption of aluminum profiles increased significantly. China's aluminum products output hit 5.28 million mt in April, up 33.7% year on year compared with 3.95 million mt in the same period last year. However, China's exports of unwrought aluminum and aluminum products slipped 15% month on month to 441,177 mt in April as countries outside of China have been under lockdown since late March.

China's primary aluminum smelters were profitability as of the end of April in view of the continuous drop in inventories and rising prices. The primary aluminum inventory held by trading houses and smelters declined by more than 500,000 mt to 1.5 million mt by the end of April, compared with a record high of 2.2 million mt at the end of March.

Most of China's alumina refiners continued to make losses as the drop in production costs failed to make up for the constant decline in alumina prices.

CNIA's aluminum industry prosperity index is composed of LME aluminum settlement price, investment in aluminum smelting, floor space of commercial buildings sold, power generation, alumina production, aluminum products exports, broad money supply or M2, primary aluminum production, main business revenues and total profits.